FMCG companies are likely to a see a muted June quarter due to various factors including elevated inflation levels, heat wave as well as lower than anticipated impact of election season on boosting consumption. Multiplex industry has also been impacted due to a muted content pipeline on the big screen due to the election season.

FMCG companies that are eyeing higher volume growth in FY25, anticipate sharper uptick in demand trends July onwards.

Naveen Malpani, Partner, Grant Thornton Bharat, told businessline, “The food Inflation in April 2024 was at 8.70 per cent, which was 18 basis points higher than March 2024. Key consumption items like pulses and vegetables are experiencing a higher inflation on account of lower yields due to an uneven rainfall. This has impacted non-discretionary spends of the consumer resulting in some volume consumption slowness for FMCG companies in the first month of the quarter. However, with normal rain forecast across the country, the sector should see progressive recovery.”

Demand trends

FMCG companies had anticipated to see some positive rub-off of the election season due to anticipated higher out-of-home demand but that is not visible on the ground, a senior executive with a FMCG company said, adding that demand trends have not seen any extraordinary boost during this period.

“It is still a market that has been impacted by inflation. To that extent, there is some tendency to postpone discretionary purchases,” Suresh Narayanan, CMD, Nestle India, had stated late last month. Responding to a query on whether the election season will boost consumption, he had said that hot temperatures are posing a challenge for out-of-home consumption. “The market is watching out for good monsoons and a boost in private consumption with re-injection of money in the market once the new government forms,” he said.

Kantar had earlier this year had said that it does not anticipate any surge in the FMCG sector at a national level due to the General Elections. The market research and insights firm expects the industry growth to be muted in the June quarter led by urban slowdown. But it pointed out that rural growth in the sector seems “certainly on the path of revival.“

Meanwhile, PVR INOX said that the ongoing General Elections has impacted “the flow of new releases in the current quarter.” The company management in an earnings call said they expect content pipeline to stabilise by mid-June.